LIsa - top up for retirement?

edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
4 replies 1.4K views
Larry12Larry12 Forumite
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edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
Hi,

I'm a high-rate tax payer and have only recently started to think more seriously about pension.

I've been contributing to my company pension and due to the tapered allowance I can only contribute 10k a year now. I also opened up a SIPP last year to use up any unused allowance from the previous 3 years.

I was going to open up a S&S Lisa as an additional top up for retirement? Is that a wise move? I was then planning to use the rest in a S&S ISA. I'm turning 40 shortly, hence why I'm thinking about opening up a Lisa.

Thanks

Replies

  • edited 26 August 2017 at 9:55PM
    AlexlandAlexland Forumite
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    edited 26 August 2017 at 9:55PM
    Welcome to the forum.

    Yes if you have maxed your (and your partners?) pension then short of filling child pensions a LISA could be a good move if you want to save more money.

    I am using my LISA to save towards my son's future such as wedding or house deposit help. He will be 24 when I am 60 and it will be Bank of Mum and Dad! I am still using a Junior ISA for Uni help.

    In the early years consider AJ Bell for a lump sum £4k into a single fund such as Vanguard Target Retirement or Nutmeg for smaller or regular contributions. Avoid HL as expensive or Skipton as cash will give a poor return. Once you get to year 2+ (£10k Inc bonus) then AJ Bell will be cheapest for both lump sum or monthly contributions.

    S&S ISAs are ok but if you have family there may be more efficient options to gift them the money?

    Alex
  • Larry12Larry12 Forumite
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    Thank you...

    I have 3 kids (all under 3 ) - so similar to you, I'll probably end up using this money to fund weddings/university as opposed to my retirement.

    I made a mistake earlier this year and opened up a SIPP with HL. I need to add more to it by the end of the tax year so may transfer.

    Thanks for the advice on AJ Bell. I will look into.

    I've been looking at JISA, I'm just not comfortable (yet) about it transferring to the child at the age of 18.

    re: Gifting money - do you mean a trust?

    Thanks
  • edited 26 August 2017 at 9:57PM
    AlexlandAlexland Forumite
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    edited 26 August 2017 at 9:57PM
    No I wasn't refering to a trust more that when you invest in a Junior ISA or a child or partner's pension it is essentially a gift.

    I am not sure the timeline works for using LISAs for Uni unless you are intending to settle their debts after they graduate or use a bridging facility? There might be limits to what they can borrow depending on your future earnings.

    I am aiming to get my son's Junior ISA up to about half the money he needs for Uni (£35k of £70k but more due to future inflation) and he can take out a loan for the rest. I had to payback a student loan and I think it will be good for him.

    I am going to trust him not to blow the Junior ISA money and will probably not tell him it's in his name and might get up early to catch any letters around his 16th and 18th birthday! It is a direct investment with a low profile fund manager so he might not even understand how to access it.

    I will keep the rest of the money we intend to use to help him in my LISA. If he genuinely needs more for a good reason that I have failed to anticipate we could always raid our ISAs.

    I have also opened a LISA for my younger wife which we would use in a similar way if we were blessed with a second child. If not it might buy us some new cars in retirement.

    Ps if looking to transfer your SIPP then AJ Bell are very good but for large sums (and if you have just done the backdated contributions you might be on your way) then consider the Halifax fixed price SIPP (also provided by AJ Bell) or Interactive Investor. I am just moving mine from AJ Bell to Halifax which are both run from the same office but am still having to pay transfer fees which break even on the savings in about a year. I am sure they are experts in transfering accounts from HL ;-)

    Alex
  • Larry12Larry12 Forumite
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    Thanks for the tips - will have a look at AJ bell.
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